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Stimulating Happiness

March 14, 2011 10:32 amMarch 14, 2011 10:32 am

Roger Cohen writes about David Cameron’s new campaign calling for a focus on “emotional prosperity” rather
than just financial prosperity. As he notes, it’s easy to be cynical about Cameron’s motives — and I am.

There’s also the question of what difference it makes. How would policy change if we agreed that happiness, not GDP, is the goal? After all, it’s not as if governments really try to maximize GDP, so why
does it matter if we change the thing that they aren’t really targeting anyway?

And yet, there are cases in which the distinction between financial and emotional prosperity makes a big difference — namely, periods of high unemployment.

One overwhelming result of happiness research is that having a job matters a lot, much more than you might have expected just from the income involved. Well, duh, you may say — and it’s true that anyone
who has ever spent time unemployed, or knows anyone who has been unemployed, knows that the blow to self-esteem is far greater than the mere financial loss.

Think about the fact that real income per capita right now is considerably higher than it was at the peak of the Clinton-era boom:

So are Americans happier? Of course not — in 1999 or 2000 everyone could easily find a job, right now everyone — even the highly educated — faces the prospect of very long-term unemployment if anything goes wrong.

So what does this say about policy? It says that job creation is urgent, even if it isn’t very productive in terms of GDP. A WPA-type program when you’re in a severe slump is more productive than most
people imagine, but even if it isn’t very productive, it can do a lot to help the nation’s overall welfare, simply by putting people to work. And if the debt run up to pay for the program means higher
taxes later, so? The monetary cost will have much less negative impact on public welfare than the unemployment that would have happened without that program.

The irony, of course, is that Cameron is pushing happiness economics even as he pursues an austerity program that will lead to a great deal of misery, above and beyond the lost GDP.